The political economy of low-wage labour

Posted: March 6, 2015 by Admin in Alienation, At the coalface, Class Matters, Economics

male-associate-carts-129863378394683634The past several decades in New Zealand have seen an expansion of part-time, casual, precarious and zero-hours contract employment.  While we’re far from Third World conditions, we do have a substantial low-wage economy compared to the several decades immediately after the Second World War.  The article below is about the American situation and we don’t necessarily agree with all the writer’s formulations – for instance, the catch-all way the term ‘neoliberalism’ is used – but it is an excellent investigation of the subject and highly relevant to what has been happening here.   

by Trish Kahle

The struggles of fast-food, retail, and other service workers since 2012 have thrust the issue of low-wage work into the national spotlight and shifted the national debate over whether to raise the minimum wage from the federally mandated non-tipped wage of $7.25 per hour. Courageous workers like George Walker, a cabin cleaner at Philadelphia International Airport, have begun challenging their impoverishment as corporate profits soar. “I am over fifty,” Walker said, “and tired of living in poverty.” Walker—forced to choose between paying for his wife’s medicine and covering the family’s housing costs—and other workers like him who have joined organizing campaigns, have highlighted the moral depravity of companies that sweep aside the daily struggles of workers in order to maximize profits. Yet even as public opinion has shifted decisively in favor of raising the minimum wage, the size of the low-wage workforce has continued to grow. Nearly 40 percent of American workers earn less than the $15.00 an hour demanded by the low-wage workers movement,1 and the experience of low-wage work is a common one. Still, myths abound about low-wage labor, its origins, and the workers who perform it. The ruling class has much at stake in this fight in which workers confront not only their wages and working conditions, but the ideological apparatus of neoliberalism, which stresses individual responsibility and deregulation. Neoliberal policies, media myths, and the intersection with oppression that many low-wage workers face collude to keep them marginalized. This persists even as their labor, particularly the labor of those in industries like healthcare and education, remain central drivers of economic growth.2

Though the recent struggles of low-wage workers, particularly those in the Fight for 15, have focused on the ideological changes and declining living standards that resulted from neoliberal transformation, Marxists understand that low-wage labor is more than a blip in capitalism’s history. Rather, the tendency toward low-wage labor is embedded in capitalist social relations. As Marx wrote in Wage Labor and Capital, “the more productive capital grows, the more it extends the division of labor and the application of machinery; the more the division of labor and the application of machinery extend, the more does competition extend among the workers, the more do their wages shrink together.”3 But even if we understand low-wage labor as a persistent historical feature of capitalism, we still have to explain its particularities in the neoliberal period, and what role low-wage labor plays in structuring ruling class economic and political power. As low-wage labor represents a larger and larger proportion of the American working class, the question of the nature of low-wage work, and flowing from that, the potential of low-wage workers to play a central role in transforming society, should be of primary concern for the Left.

What is low-wage labor?
What does it mean to be a low-wage worker in the United States? Workers’ concept of low-wage work is shaped by a number of sociopolitical factors—documentation status, race, gender, geographic location, education level, and previous employment. Subjective factors like workers’ perception of the job market also play a role. Economists’ category of low-wage work, meanwhile, appears similarly malleable with different markers being used in different studies. For the sake of clarity, in this article I will define low-wage labor as any job that pays $13.83 or less an hour, the most common boundary in the economic studies surveyed in this article. We should note, however, that the sheer scope of low-wage work in our economy makes any clean categorization difficult. While no one would argue that it is as difficult to get by on $20.00 an hour as it is on $7.25, most workers in both the low- and middle-wage categories—$13.83 and under and $13.84 to $21.13 per hour respectively—earn less than the estimated cost of living in most major cities for an average family. A huge spectrum of workers in the United States is kept below, at, or very barely above the poverty line. In reality, for most people in the US, only high-wage jobs —hose which pay $21.14 or more per hour—can really be considered living-wage jobs.

Low-wage jobs are not, however, only characterized by low pay. They also feature a lack of job security and the resultant rate of high turnover, few or no benefits, a lack of paid sick days, and quite often irregular or part-time scheduling. Consider, for example, that among the lowest paid quintile of workers in the United States, which roughly equates to those workers earning $13.83 or less per hour, 54 percent did not have employer-provided health insurance and 37 percent had no health insurance of any kind. While not a new problem, lack of benefits represents a growing trend. In 1979, only 15 percent of the lowest paid workers lacked health insurance, meaning that in the neoliberal period, the percentage of low-wage workers without health insurance—and therefore, without meaningful access to health care—has more than doubled.4 Earned sick days is another area where sharp disparities exist between low-wage and higher wage workers: in 2010, 68 percent of the lowest paid quintile of workers had no paid sick days, compared to 11 percent among top-paid workers.5 The persistent connection between low wages and lowered access to benefits has led left-wing economists like John Schmitt to assert: “In a country such as the United States. . .where welfare state institutions and labor laws only offer weak protections, low-wage workers face a host of problems tied to low wages.”6 Thus, while neither low- nor middle-wage workers earn a living family wage in major US cities, low-wage workers face additional challenges which most middle-wage workers do not.

Being a low-wage worker most essentially means being part of the working class, the same working class as middle- and higher-wage workers. Like machinists and coal miners, low-wage workers, while overwhelmingly concentrated in service industries that facilitate social reproduction7, sell their labor power to capitalists in return for a wage. Even though the day-to-day experience of a school teacher and a fast-food worker might be very different, their relationship to capital is the same. They own no means of production and are compelled to sell their labor to survive. The determinate form of labor obscures the actual relationship with capital. As the mid-twentieth-century socialist Harry Braverman wrote, “for capitalism, what is important is not the determinate form of labor but its social form, its capacity to produce, as wage labor, a profit for the capitalist.”8

While individual capitalists care little for the form of the labor so long as they profit, service work, productive or unproductive for capital, plays a central role in the social division of labor, particularly as the functions of the family are socialized and incorporated into the formal mechanisms of the market. Food service, healthcare, education, cleaning staff: all play a central role in the social reproduction of the working class. The very ability of higher-wage workers to return to work each day relies on other workers engaged in lower-wage labor. The differences between an average Boeing machinist who makes $73,000 each year and a Whole Foods cashier, who, at $10.00 an hour earns $20,800 if they are lucky enough to work full-time, may seem stark, but from the perspective of capital, their wage relationship—that they sell their labor in order to survive—is identical.9

Oppression and low-wage labor
The intersections of other forms of oppression with the exploitation of the low-wage workforce have also resulted in gender and racial dynamics in the low-wage workforce, exacerbated by forty years of neoliberalism. The gender and racial composition of the low-wage workforce illuminates the ways in which oppression frames the experience of low-wage work, as well as the role it plays in suppressing wages for women and workers of color who are disproportionately consigned to these jobs. Low-wage labor has historically been reserved for the most marginalized members of the working class. In the early years of the United States, the low-wage workforce was populated by landless American-born whites, free African Americans, and immigrants. These men and women scraped streets, dug ditches, sewed clothing, worked the docks, dredged harbors, and worked in the homes of the republic’s wealthier citizens. As Seth Rockman notes, the challenges facing the “unskilled” (not artisan) working class in the late eighteenth century bear a striking similarity to the challenges faced by the labor movement today—“mobilizing a diverse workforce that comprises the politically disfranchised,” people whose “sex, race, and legal status make them particularly vulnerable to exploitation.”10

In fact, social oppression was key to maintaining the poverty wages of low-wage workers in the early republic. Curfew laws for African Americans limited the employment opportunities available to free Black workers and forced them into specific kinds of jobs which were also the lowest paid. In a society where women were considered property, their access to wage labor was limited by a cultural logic that considered “paid labor was at best a life stage for a woman, a prelude to marriage, childrearing, and reliance on a husband for subsistence. Since women were thought to be dependent by nature, there was no need to pay them the full wages men demanded on behalf of their wives and children.”11 In reality, sub-subsistence wages became a compulsion toward marriage and left female breadwinners unable to make ends meet. Even as Thomas Jefferson extolled the yeoman farmer as the American ideal, the wage workers of the early republic struggled to pay rent and to feed and clothe their children. For these workers, “wage labor was not a stepping stone to landed independence . . . and having a job was no guarantee of making a living.”12

The similarities between wage workers in the pre-industrial United States and low-wage workers today should not lead us to conclude, however, that the people who are concentrated in low-wage labor have remained unchanged for more than two centuries. Higher levels of unionization and the passage of antidiscrimination legislation like the Civil Rights Act of 1964 helped to ameliorate racial and gender segregation in the workforce, particularly through affirmative action in hiring and promotion. Consider the story of Olivia Rowe. In 1974, Rowe, a Black domestic worker and single mother of eight children, was hired as a coal miner by Bethlehem Steel after Black and women workers in the steel mills organized to demand nondiscrimination in hiring, and several other women filed lawsuits against mining companies under Title VII, the provision of the Civil Rights Act which prohibits employment discrimination on the basis of race and sex. Access to a union job increased Rowe’s wages by more than 500 percent, and signaled the end of a nearly destitute life for her and her children. As a domestic worker, she had been earning only $50.00 each week.13

Forty years of neoliberalism has once again produced a significant shift in the composition of the low-wage workforce. Economic restructuring has increased the number of low-wage jobs at the same time that a political backlash against collective rights and the demand for redistributive remedies has rolled back the gains of twentieth-century social movements. Demands for equality morphed into “equality of opportunity”—a concept of equality uniquely well suited for a period dominated by a return to free-market fundamentalism—which ultimately “helped to obscure deepening social divisions and curtail the utility of civil rights laws for workers facing simultaneous and systemic disadvantages” based on their sex, race, and immigration status.14

One marked shift in the low-wage workforce is the increasing (re)concentration of Black, Latino, and Asian workers into low-wage jobs. In 1979, more than 75 percent of low-wage workers were white. Today, that percentage has dropped to just over 50 percent, but workers of color, and Latino workers in particular, have been funneled into low-wage jobs. From 1979 to 2013, Latino workers went from approximately 6 percent of the low-wage workforce to 26 percent. Black workers, who have historically been consigned to low-wage labor in the United States, did not see as dramatic a shift. Nonetheless, their presence, alongside a modest increase in the number of Asian workers concentrated in the low-wage workforce, increased slightly, while white presence as a percentage of the low-wage workforce dropped precipitously.15 Meanwhile, underscoring the connection between low-wage labor and unemployment, Black workers in particular were far more likely than whites to experience unemployment. An estimated 19.6 percent of Black workers—one in five—were unemployed at some point in 2013, nearly two and a half times the unemployment rate for white workers. In other words, while the job market remains difficult for all workers, “the employment situation for African Americans remains at something more akin to depression-level conditions.”16 These larger-scale processes, alongside other institutionalized forms of racial discrimination (particularly those that intersect with the criminal justice system) have concentrated African Americans in low-wage jobs. Blacks represent 11.2 percent of the employed population sixteen years and older, but they account for 16.4 percent of food servers, 18.5 percent of food preparation workers, and 15.6 percent of dishwashers.17

Women are also overrepresented in the low-wage workforce, accounting for 56 percent of minimum wage workers.18 In certain low-wage occupations, however, the concentration of women is far more dramatic. Women are 89 percent of all home healthcare workers, 71.7 percent of retail cashiers, 87.7 percent of housekeeping staff, 70 percent of food servers, 65.2 percent of fast-food workers, and 92 percent of receptionists.19 Overrepresentation of women of color in low-wage jobs means that the gender wage gap for women of color is significantly larger than for white women. In 2013, Black and Hispanic women earned sixty-seven cents and sixty-one cents, respectively, to each white man’s dollar, compared to eighty-two cents on the white male dollar for white women. When we put this in concrete terms like weekly earnings, the outcome becomes clear. Average weekly pay for white male workers in 2013 was $884.00. For Black women, average weekly take home pay was $606.00, and for Hispanic women it was $541.00. Low-wage jobs, where many subsist on $200.00 or less each week, represent a significant drag on average weekly pay for the population as a whole.20

And while workers of every age and education level can be found in low-wage occupations, there are trends in these demographic groups worth noting as well. High unemployment rates for a highly educated youth population alongside the destruction of middle-wage jobs through the course of the recession have pushed college degree holders—many of them youth, but also degree holders who formerly held middle-wage jobs—into low-wage work that does not require a college degree. The upward shift in the education levels of low-wage workers has been pronounced. Today, 41 percent have at least some college level education, up from 29 percent in 2000.21 In other words, although increasingly well-educated, young workers are more and more likely to be stuck in low-paying jobs even as the cost of higher education skyrockets. As economist John Schmitt notes, soon these young, highly educated workers “will start asking whether college is worth it.”22 As Schmitt has observed, increased education does not necessarily lead to higher pay: “Where you start out in terms of wages helps to predict where you move over time.”23

Simultaneously, the low-wage workforce has aged. While high-school-aged youth have never represented a majority of the low-wage workforce, the percentage of low-wage workers aged sixteen to nineteen has dropped significantly since 1979, from 32 percent to 18 percent. Most of that shift has taken place since 2000, when 28 percent of low-wage workers were in that age group.24 Meanwhile, workers in the older age groups have all become increasingly represented in the low-wage workforce, pointing to a growing group of workers for whom low-wage jobs aren’t an entry point, but permanent. Today, the average age of minimum-wage workers is thirty-five; 88 percent are twenty or older, and 35.5 percent are over forty.25 Despite growing numbers of youth lacking access to living-wage employment, the crisis of low-wage labor is not specifically a youth problem. Nevertheless, low wages exacerbate the problems created by student debt, since payment on student loans becomes nearly impossible.

Critically, racial and gender segregation in the workforce is longstanding, and workers’ organizations have often considered “unorganizable” workplaces with high concentrations of women or workers of color.26 Yet even a brief look at the history belies this conventional wisdom. Numerous and important historical examples suggest that the “unorganizability” of workplaces dominated by women workers and workers of color is a product of the pervasiveness of racism and sexism in society, rather than a reality created by the relations of production in these workplaces. In fact, because of the vulnerability engendered by unstable employment, low wages, and poor working conditions, many people of color and women workers have led important campaigns demanding union protections, living wages, safe working conditions, and nondiscrimination. The seamstresses of Baltimore fought the first living wage campaign in US history, when in 1833 they declared:

Resolved, That we the females of the city of Baltimore, who have for a series of years been compelled to work at our needles for our maintenance, have not received value for our labor, and that we believe the time has come now when we should come forward in justification of our rights and privileges with our sisters of other cities.27

The first national strike of restaurant workers took place just thirty years later when African American waiters in New York organized the Waiters Protective Association, struck, and won wage increases. Their bravery inspired others up and down the East Coast to do the same. And waiters organized across racial lines—an uncommon sight in the nineteenth century. A few months after the initial strike, thousands of waiters walked off the job in multiple cities, demanding dignity and higher wages. The waiters “were especially aggrieved by the common practice of managers calling to them by whistling, as if they were dogs.”28 And in 1972, Black fast-food workers in Atlanta struck Church’s Chicken stores, demanding the implementation of the civil rights policies which had passed in Congress but made little impact on their experience of low-wage work. The workers also demanded raises, improved working conditions, and dignified treatment at work.29 The Retail, Wholesale and Department Store Union (RWDSU) won a forty-hour workweek for employees at Gimbel’s department store in 1941, and women workers at a Detroit Woolworth’s in 1937 won “an absolute and clear-cut victory”: a 20 to 25 percent raise, overtime pay, union recognition at all Detroit Woolworth’s stores, and free uniforms and laundry service.30 As historian Dana Frank explained, the women workers “took on one of the biggest corporate powers of their time and won big, inspiring hundreds of thousands of other ordinary salesclerks—and who knows who else—to stand up (or sit down) for their rights, to claim a living wage, to demand an end to corporate paternalism, and to insist they were indeed live and vibrant human beings, not change-making machines.”31 In taking on the bosses, a significant section of retail workers turned their precarious employment into stable, working-class jobs that paid living wages and provided benefits and union protections.

Walmart’s world: Low wages, always
The gains made by Woolworth’s workers, strikers at Church’s Chicken, and nineteenth-century waiters have largely been undone during a forty-year employers’ offensive. Now the world of low-wage labor has largely been remade in a new image: Walmart. Global poverty is Walmart’s business model, and it has proven incredibly lucrative for the parasitic family that owns it: the Waltons. As of 2013, the Waltons control “a fortune equal to the wealth of the bottom 42 percent of Americans combined.”32Dana Frank points out that Walmart “creates poverty all around the globe, and then it turns around and sells those products to other poor people whose poverty it has helped create, and rakes in the money.”33

Low wages are a Walmart tradition: when the minimum-wage laws were extended to cover retail workers in 1960, Sam Walton did everything he could to avoid paying his employees the federal minimum wage of $1.15 per hour. When a court eventually ordered him to begin paying minimum wages and to issue back pay to employees for lost wages, Walton threatened to fire anyone who cashed the checks for back pay.34

Today, Walmart is the largest private employer in the world, employing 2.1 million people worldwide. Two-thirds of those employees are in the United States, which means that Walmart employs a mind-blowing 1 percent of the American working population.35 The average Walmart “associate” makes $8.81 per hour, which means even if a worker manages to get full-time hours, their annual income is $15,576—well below the $22,050 federal poverty line for a family of four.36 And the depressive effects of Walmart’s wages aren’t only felt by its employees. Arindrajit Dube and Steve Wertheim found that “Walmart reduces earnings for retail workers—through substituting lower paying jobs for better ones, and through putting pressure on other retailers (supermarkets in particular) to reduce wages.”37 Depending on the state, Walmart workers average 20 to 30 percent lower wages than their union counterparts covered by United Food and Commercial Workers (UFCW) contracts. But as traditional grocery stores lose market share to Walmart, which now controls more than 24 percent of grocery sales nationwide, union grocery jobs are fast disappearing. In Chicago, for example, 6,000 union grocery workers lost their jobs when the Dominick’s chain went out of business. Meanwhile, Walmart continued to expand into the Chicago market. There are now eleven Walmart community markets and super centers in the city limits. As Bethany Moreton describes, “Walmart didn’t add jobs, it cannibalized existing ones.”38

But low wages and an infamously anti-union atmosphere are only the beginning of the scope of Walmart’s impact on the US economy. Walmart subsidizes its business model by relying on the state to make up the difference between what it pays its employees and what those employees need to live. In 2013, for example, Walmart received a $6.2 billion dollar subsidy as its employees were forced to rely on food stamps, Medicaid, housing and heating assistance—programs already under strain as budget cuts axed services to thousands across the country. Additionally, Walmart and the Waltons avoid paying more than $4 billion in taxes each year—by jumping through loopholes, dodging estate taxes, and writing off capital investments. To top it all off, Walmart then pockets more than $13.5 billion in revenue annually from food stamp sales—accounting for 18 percent of all food stamp sales in the country.39 In other words, Walmart has turned programs intended to protect regular people from the worst ravages of the market into a central part of its business model.

Meanwhile, Walmart as a corporation and the Walton family as individuals and through organizations they sponsor, have poured millions of dollars into influencing elections and policy making, supporting right-wing politicians and legislative efforts, as well as free trade agreements like NAFTA which have proven devastating for the international working class. As the nation’s largest seller of guns and ammunition, Walmart has sought to block all efforts at gun control. In addition, the company has supported ad campaigns against politicians opposing the Keystone XL pipeline, disproportionately donated to climate change deniers in Congress, and joined in a campaign to prevent LGBT couples from adopting children in Arkansas. Walmart has also directly intervened to accelerate the transformation of public education into a business based on Walmart’s model by funding programs like Teach for America, which has led the charge to deprofessionalize teaching, and Students First, Michelle Rhee’s organization dedicated to high-stakes testing and school privatization.40 Right-wing politics, increasingly out of step with the American public, also help to drive Walmart’s vision internationally: drive down wages, increase consumption, and spread the free market gospel as the solution to the very problems it created.

And while Walmart may have pioneered this business model—a global network of sophisticated logistics, low wages and few benefits, massive reliance on production in emerging industrial economies—other corporations have been quick to adopt it. Walmart set the standard for retail corporations in the global economy by fostering political and economic conditions that skewed the balance of workplace power heavily in their favor. Our world today is the world that Walmart made, a decades-long class project that has resulted in skyrocketing inequality and decreased standards of living for workers.

Low-wage labor and capitalism
It is one thing to observe these trends, another to explain them. A multitude of explanations for the massive growth of low-wage labor exist: deindustrialization and the expansion of the service economy, lack of education, and unambitious millennials, just to name a few.

It is common to assert that the low-wage economy is simply a byproduct of the US economy’s shift from factory-based industrial work to a largely service economy. But this facile assertion doesn’t get to the heart of the matter, which has less to do with the labor performed than it does with the atomization of the labor force. Braverman noted that the shift to the service sector is based largely in nonunion labor, and “draw[s] on the pool of pauperized labor at the bottom of the working class population. These [service] industries create new low-wage sectors of the working class, more intensely exploited and oppressed than those in mechanized fields of production.”41 While the service economy has continued to grow, Marxist labor writer and activist Kim Moody points out that service-sector growth outpacing traditional industrial growth is not a new phenomenon. “In fact,” he writes, “there was never a time in the U.S. when goods-producing labor outnumbered service-producers in the nonagricultural workforce.”42Certain sectors like healthcare and education are becoming increasingly privatized—and have become the most profitable sectors of the economy. There is also no inherent link between service sector growth and low wages—or, for that matter, between industrial growth and low wages. While food service jobs pay low wages, nursing and teaching continue to be, for the moment, better paying working-class jobs. Meanwhile, the centers of American industrial growth, mostly located in the South, have reindustrialized on the basis of low wages. When General Electric shifted production of electrical capacitors from Fort Edward, New York to Clearwater, Florida, the company decreased wages by more than 50 percent, from an average of $29.03 per hour for New York employees to $12.00 per hour for Florida hires.43 So while service-sector jobs are quite often low-wage jobs, declining wages in manufacturing must also be explained. The service sector alone is not to blame.

Wages haven’t decreased because workers today are less skilled than they were forty years ago. In fact, workers today are better trained and educated than at any other point in history—and capitalists have even profited from training and educating workers through an ongoing class project to privatize education. From for-profit universities to for-profit charter schools, capitalists are turning education into a business.

Thus, it is important to stress that low wages are not inherently tied to the type of labor being performed, but instead exist as an expression of a social relationship, a disparity of class power in the workplace. The relative consistency of low wages in jobs like fast food and retail “naturalizes” them—making it appear that the jobs are inherently low wage because of the nature of the labor performed rather than the expression of a social relationship between labor and capital in which capital currently dominates. It is true, for example, that food preparation, in particular, dominates the field of low-wage work, accounting for 74 percent of low-wage jobs.44 Nevertheless, the jobs that we classify as low wage change over time as workers organize and shift that balance of power, and as capitalists beat back workers’ gains and reassert dominance over wages and working conditions. Our understanding of low-wage work must be historically specific to reflect these shifts. Before the rise of unions in auto, for example, assembly-line jobs were low wage, and then became some of the nation’s best paying working-class jobs, thanks to the battles fought by workers who struck and occupied. After forty years of sustained attacks with inadequate union resistance, the balance of class power has again shifted, and we have seen the introduction of two-tier contracts which are the starting point for turning industrial work that once paid relatively high wages into low-wage work that allows American manufacturing outfits to be more competitive in the international market.45

Even work thought to require specialized skills and training is not immune from the pressures to low wages. Adjunct faculty at colleges and universities, thanks to the rapid casualization of academic labor, are often compensated at an hourly rate similar to workers in food service, despite requiring a high level of educational attainment and having a radically different skill set than food service. What both the line chef and the humanities adjunct have in common, however, are low—though growing—levels of organization at work and a large pool of potential replacement labor, which translates into a highly asymmetrical balance of power at work. High educational attainment and high skill level don’t necessarily prevent work from being low wage.

There is also nothing inherently low wage about certain kinds of work. Marxists see the wages paid to workers as part of a dynamic struggle over class power. Masked by the dollars in every dismal paycheck is the balance of class power, and that is a balance workers can, through organization, alter. The nature of low-wage work represents not only a sharp disparity of power in the workplace, but also points to a larger reorganization of work in the United States. Therefore, while the majority of public discussion of low-wage work has focused on the fast-food and retail industries as the result of campaigns like OUR Walmart and Fight for 15, limiting our understanding of the political economy of low-wage work to the type of work being done by fast-food and retail workers does us an analytical disservice. It fails to acknowledge how fast-food and retail labor fit into an economy-wide decline in wages that has accompanied a simultaneous decline in workers’ organized power in the workplace.

Although this article has focused on the dynamics of low-wage work and American capitalism, the growth of low-wage work is also international. Of the nineteen richest OECD countries, only four (Finland, Norway, Italy, and Belgium) classify less than 10 percent of their workforce as low wage. One in five workers in the United Kingdom, Canada, Ireland, and Germany are low-wage. Still, while the growth of low-wage work remains an international problem, the United States, with 24.8 percent of jobs categorized as low-wage, leads the OECD countries—including some of the most ravaged European economies: Spain, Portugal, Ireland, and Greece—in the percentage of the workforce which is classified as low wage.46

Exacerbating this disparate power, the state has not only allowed this state of affairs to continue, but has actually aided in the restructuring of the economy in the name of “global competitiveness” and “job creation.” The federal minimum wage has not matched inflation. The federal minimum wage in 2014 of $7.25 has significantly less purchasing power than 1968’s $1.60, which would be the equivalent of $10.74 today.47 Additionally, because increases in wages have lagged sharply behind productivity, minimum-wage workers today are working harder for less money. If minimum wage increases had matched productivity, it would be $21.72—three times the current federal minimum.48 In the context of the crisis, the state has also moved to support restructuring in other ways discussed below, all of which also seek to bolster the ideological power of neoliberalism.

The 2008 financial crisis and accompanying high rates of unemployment have aided in the ongoing restructuring of work in the United States which began with the onset of neoliberalization in the 1970s. During the crisis, not only have concentrations of workers been shifted by forced changes in occupation, but real wages have declined even for workers who have remained in the same employment, particularly for low- and middle-wage workers.

Although middle-wage jobs, which pay $13.84 to $21.13 per hour, accounted for 60 percent of jobs lost during the recession, low-wage jobs have comprised 58 percent of jobs created since the recovery began in 2009. Yet the recession has not only funneled workers formerly employed in middle-wage jobs into low-wage jobs, it has also led to significant declines in the wages paid for these jobs. In other words, some workers are being laid off from their office job and being forced to work in food service, but others are essentially laid off and rehired for the same tier of job at a lower wage. This trend was especially pronounced among workers in healthcare and food service industries. Between 2009 and 2012, the wages of food preparation workers, home health aides, housekeeping staff, and personal care aides—all jobs with median hourly wages between $9.28 and $10.01—saw declines in wages over 5 percent. Restaurant cooks saw the steepest decline—a 7.1 percent drop in real wages in only three years. And although wages have declined across all pay increments, higher wage occupations—those with hourly wages of $18.95 or higher—declined much less, about 1.8 percent. Not only are significant numbers of people working in jobs in a lower pay bracket than they were before the crisis, they are also working for less money than the workers in those jobs five years ago.49

Almost one in four American workers are employed in a low-wage job, and increasingly, they’re permanently stuck there. As Schmitt observed, “Not only are low-wage workers likely to stay in low-wage jobs from one year to the next, they are also more likely than workers in higher-wage jobs to fall into unemployment or to leave the labor force altogether.” Despite higher rates of turnover in low-wage jobs, for the most recent data available, approximately 50 percent of low-wage workers remained in low-wage jobs over a five year period, and an additional percentage as high as 23 percent dropped out of the workforce entirely.50And for those workers seeking employment with higher pay, periods of being employed in low-wage labor had “almost as large an adverse effect as unemployment.”51 Indeed, economist Mark Stewart concludes that “not all jobs are ‘good’ jobs, in the sense of improving future prospects, and. . . low-wage jobs typically do not lead on to better things.”52

For low-wage workers who retain their employment, obstacles to higher wages remain the norm. The National Employment Law Project (NELP) has noted “clear barriers” to upward mobility for workers in the fast-food industry. Almost 90 percent of the jobs are front-line (compared to 64.1 percent for all industries), with a median hourly wage of $8.94. An additional 8.7 percent are low-level supervisors, with a median wage of $13.06, which still puts many below the poverty line. Only 2.2 percent of fast-food jobs are held by managers, a sharp contrast to the rest of the economy, where 31.1 percent of jobs are managerial, professional, or technical. Opportunities for workers to move into franchise ownership positions are even slimmer. Despite corporate claims that employees may go on to run their own franchises, statistics tell a different story. For the fast-food industry as a whole, there are ninety-nine low-wage employees for every franchise owner. In the larger fast-food corporations, this contrast is even stronger: at McDonald’s, the ratio is 293 employees for each franchise owner; at Wendy’s, 260 employees per franchise owner.

The disparity in pay extends beyond the fast-food industry, which has been the primary target of campaigns to raise the minimum wage. Only 8 percent of Home Depot employees and 9.4 percent of Macy’s employees earn more than $70,000 annually. Compare this to Ford, where more than 50 percent of workers will take home more than $70,000 at least one year during their employment at the company. Unfortunately, declining wages and two-tier contracts make it unlikely that the legacy of a highly organized workforce will continue into the future with such strength without resurgence in militancy among autoworkers.53

This creates what economists call a “bottleneck,” preventing entry-level workers from advancing into higher-paying positions. Ownership, which for most fast-food companies requires millions of dollars in net worth and liquid assets, is all but impossible.54Josh Boak has noted that while the depth of the 2008 crisis contributed to this process, it actually extends further back: the middle-wage occupations which used to be “stepping stones” for workers in low-wage jobs have disappeared not only since 2008, as the NELP study noted, but over the course of three economic recessions dating back to 1991.55 Economists Henry Siu and Nir Jaimovich have stressed that the economy’s shedding of middle-wage jobs is not a slow process, but happens in rapid spurts, coinciding with an economic crisis.56

For Marxists, this underscores the central role that crises play under capitalism. They help the capitalists who survive the crises to restructure the economy, to reconstitute themselves, and to increase their own profitability. And in the context of trying to understand low-wage labor, it clarifies another point: that the restructuring of work is not natural, nor is it automatic, but rather it is shaped by ruling-class interests. And indeed, the nearly 25 percent of American workers now employed in low-wage jobs is expected to grow more than 3 percentage points to 28 percent in the next six years, even as profitability has been restored and economic growth, though sluggish, has returned. Siu and Jaimovich, like Canadian Marxist David McNally, underscore that the current recession is not a “normal” recession, where after a period of decline, the economy returns to its previous level and workers, recalled to their jobs, recover what they lost in the downturn. “We think of recessions as temporary,” Siu said, “but they lead to these permanent changes.”57 “CNN Money” stated that “Low-paying jobs are here to stay,” but we should add an important caveat—low wages are, indeed, here to stay unless we shift the balance of class power in the favor of workers.57

The state of low-wage labor
Yet low-wage workers not only confront companies like Walmart and McDonald’s, because the shift to a low-wage economy hasn’t been carried out by the corporations alone. The collusion of the state with capital reaffirms that the state is an arm of ruling-class power. Even beyond the austerity measures enacted by the government in order to drive down the living standards of working-class people, the state has actively participated in the remaking of the economy as a low-wage economy.

Indeed, the legislative attacks on workers have framed the resistance that emerged in the form of Fight for 15. Between 2011 and 2012, before the fight for a $15.00 minimum wage emerged, several states either repealed or capped their minimum wages, and others, like Mississippi, passed laws preventing counties and municipalities from instituting minimum wages. Pushed by the right-wing American Legislative Exchange Council (ALEC) and the US Chamber of Commerce, these laws counter popular opinion, and in some cases have even overturned popular referendums.58 These legislative attacks have also impacted other aspects of low-wage work, particularly sick leave. Since 2010, nine states—Wisconsin, Louisiana, Arizona, Florida, North Carolina, Indiana, Mississippi, Tennessee, and Kansas—have banned local governments from establishing a right to paid sick leave. In the case of Wisconsin, this involved the repeal of a Milwaukee sick day ordinance which had been supported by more than 69 percent of voters in a 2008 referendum.59

At the heart of such coordinated government intervention lies one of the central tenets of neoliberalism: that the solution to all of a society’s problems lies in economic growth (i.e., “job creation”)—a myth which no level of human suffering or contradictory evidence will unmask for the politicians and capitalists intent on implementing policies aimed at creating growth at any cost. Yet economist John Schmitt has demonstrated what many workers had already felt through experience—that “economic growth is not a solution to the problem of low-wage work.” Economic growth during the neoliberal period (1980–2009), measured as GDP, has no meaningful relationship to percentage of workers relegated to low-wage employment, nor is there a relationship between per capita GDP and the number of jobs in an economy which are low wage. In fact, according to Schmitt’s data, the best way to decrease the percentage of jobs which are low-wage is to increase unionization rates and social spending programs.60 

Additionally, the state has driven an education agenda that stresses the restructuring of public education to meet industry needs. In Wheeling, Illinois, for instance, the Department of Education worked with STEM (Science, Technology, Engineering, and Mathematics) industries to provide Wheeling High School with a nanotechnology lab. Education Secretary Arne Duncan noted that investments in STEM education were crucial in order to meet the demands of the new economy. Installing the lab in a high school wasn’t just to set students on a path to professional careers as engineers and researchers. Experience as a high school student in a nanotech lab would enable noncollege-bound students to enter the STEM fields without additional training, “right out of high school.”61 Training additional students for entry-level research industry jobs by providing them with a basic skill set without also providing them with training to organize and carry out research helps to specialize labor and maximize efficiency, much like the process Braverman noted in manufacturing in Labor and Monopoly Capital. 

And, of course, the state controls the national borders. Neoliberal policies have opened the borders to capital and severely restricted the ability of workers to cross them. Free trade policies like NAFTA have driven unemployment and displacement in places like Mexico, and huge waves of migration have resulted. Criminalizing migrants after creating an economic state of affairs which forces migration is a mechanism to ensure cheap labor in the United States, whose population growth rate does not keep pace with economic growth. As Justin Akers Chacón notes, making work visas inaccessible “deprive[s] the workers of the means to change jobs, negotiate wages in good faith, remain in the country to work for extended periods, or establish permanent residency.”62 The contradiction of borders open to capital but restricted for workers, a contradiction managed by the state, is a central aspect of global neoliberalism..

Conclusion
The situation of low-wage workers, and the position they occupy in a changing economy, are important to understand for anyone interested in challenging capitalism. This is not only because of the moral repugnance of consigning millions of workers who are disproportionately women and people of color to a life where they must constantly struggle for basic survival, but because the situation of low-wage workers portends things to come for the rest of the working class. We have already seen the first steps toward the reorganization of manufacturing into low-wage work with the introduction of two-tier contracts, disappearing pensions, and decreased benefits packages. The wage erosion low-wage workers experienced during the recession—averaging a 68 cent drop in hourly wages, equivalent to an income drop of 6.4 percent—mirrored the larger trend for all workers, who experienced an 8.4 percent decrease in household wealth over the same period.63 The mechanisms which grind so powerfully against low-wage workers are also working against the class as a whole.

The solution is clear, though certainly not simple: we need highly organized, militant unions that will fight for workers’ interests inside and outside of the workplace, and we need a political alternative to the two-party system—since neither Democrats or Republicans have any interest in standing up to the efforts of corporations to shape political debate and legislation in favor of capital.

Thanks to the struggle fast-food and retail workers have waged since November 2012, some groups of low-wage workers have become more visible in society. The idea of raising the minimum wage to rectify the discrepancies between increases in the minimum wage, inflation rates, and productivity has gained traction, particularly following the Occupy movement which clarified the question of inequality for millions of Americans (“We are the 99 percent!”). Low-wage workers who have joined organizing committees around the country are more than a movement of low-wage workers. They represent a growing portion of the wider working class awakening to the desperate need to fight against attacks in the workplace, new or sustained, and to confront the austerity agenda being thrust on us from every direction.


  1. Jillian Berman, “Telling Fast Food Workers to ‘Get a Better Job’ is Nonsense, in one Chart.” Huffington Post, December 11, 2013. http://www.huffingtonpost.com/2013/12/11….
  2. National Employment Law Project (hereafter NELP), “Soaring Poverty at the Philadelphia International Airport: How Low Wage Jobs Keep Philadelphia #1 for Poverty.” June 11, 2013. http://www.nelp.org/page/-/rtmw/NELP-Soa….
  3. Karl Marx, Wage Labor and Capital (New York: International Publishers, 1975), 31.
  4. Jin Hye Rho and John Schmitt, “Health Insurance Coverage Rates for US Workers, 1979-2008.” Center for Economic and Policy Research, 2010. http://www.cepr.net/documents/publicatio….
  5. Bureau of Labor Statistics, “Employee Benefits in the United States, March 2011,” Table 6. http://www.bls.gov/news.release/pdf/ebs2….
  6. John Schmitt, “Low Wage Lessons.” Center for Economic and Policy Research, January 2012.
  7. “Social reproduction” refers to tasks performed for the individual consumption of workers “both in terms of the daily replenishment of laborers and also in preparing the next generation of workers to enter the workforce.” See Sharon Smith, “Theorizing women’s oppression, part 1, International Socialist Review 88, March 2013. While domestic labor in the home carries out most of these tasks, they are also provided through the capitalist market. On this point, see Tithi Bhattacharya, “Explaining gender violence in the neoliberal era,” International Socialist Review 91, Winter 2013-2014.
  8. Harry Braverman, Labor and Monopoly Capital: The Degradation of Work in the 20th Century (New York: Monthly Review Press, 1998), 250.
  9. Mike Baker, “Some Workers to Reach $100K Pay in Boeing Deal.” AP, January 2, 2014. Salary figure is based on the most common pay grade of Boeing’s machinists. Baker notes that Grade 1 machinists start much lower, about $25,000 annually before overtime, but typically work up to top pay scale within six years. Whole Foods, with a base wage of $10.00 per hour, also caps employee pay at $15.00 per hour, unless the employee is promoted within the company, which is far from guaranteed.
  10. Seth Rockman, Scraping By: Wage Labor, Slavery, and Survival in Early Baltimore (Baltimore: Johns Hopkins University Press, 2009), 15.
  11. Rockman, 133.
  12. Rockman, 1.
  13. “Lady Miner Digs Her Job.” Ebony, October 1974.
  14. Katherine Lee Turk, “Equity on Trial: Women and Work in the Age of Title VII.” (PhD diss., University of Chicago, 2011), 17.
  15. Steven Greenhouse, “Low Wage Workers Are Finding Poverty Harder to Escape.” New York Times, March 16, 2014. Note that, in absolute numbers, whites still represent the majority of low-wage workers.
  16. Heidi Shierholz, “Likely That Nearly One in Five Black Workers Was Unemployed at Some Point in 2013.” Economic Policy Institute, January 15, 2014.
  17. Bureau of Labor Statistics, “Annual Averages: Employed Persons by Detailed Occupation, Sex, Race, and Hispanic or Latino Ethnicity.” 2013.
  18. David Cooper and Dan Essrow, “Low Wage Workers Are Older than You Think.” Economic Policy Institute, August 28, 2013. http://www.epi.org/publication/wage-work….
  19. Bureau of Labor Statistics, “Annual Averages: Employed Persons by Detailed Occupation, Sex, Race, and Hispanic or Latino Ethnicity.” 2013.
  20. Institute for Women’s Policy Research, “The Gender Wage Gap in 2013: Differences by Race and Ethnicity, No Real Growth for Women.” March 2014. Report available: http://www.iwpr.org/publications/pubs/th….
  21. Steven Greenhouse, “Low-wage Workers Are Finding Poverty Harder to Escape.” New York Times, March 16, 2014.
  22. Quoted in Tami Luhby, “Low-paying Jobs Are Here to Stay.” CNN Money, August 2, 2012.
  23. Quoted in Josh Boak, “Low-wage Jobs Unexpectedly a Way of Life for Many.” AP, March 12, 2014.
  24. Greenhouse, “Low-Wage Workers Are Finding Poverty Harder to Escape.” New York Times, March 16, 2014.
  25. David Cooper and Dan Essrow, “Low Wage Workers Are Older than You Think.” Economic Policy Institute, August 28, 2013. http://www.epi.org/publication/wage-work….
  26. See Sylvia Walby et al, Gender Segregation at Work, 1988.
  27. Quoted in Rockman, 132.
  28. Daniel Levinson Wilk, “The Historical Precedent for Fast-Food Strikes.” Al Jazeera America, December 21, 2013.
  29. Monica Waugh-Benton, “Strike Fever: Labor Unrest, Civil Rights and the Left in Atlanta, 1972” (Master’s thesis, Georgia State University, 2006).
  30. Dana Frank, “The 1937 Woolworth’s Sit-Down: Women Strikers Occupy Chain Store, Win Big.” (Chicago: Haymarket Books, 2012), 49.
  31. Frank, 51.
  32. Tom Kertscher, “Just How Wealthy Is the Wal-Mart Walton Family?” Politifact.com, December 8, 2013.
  33. Frank, 4.
  34. Nelson Lichtenstein, The Retail Revolution: How Walmart Created a Brave New World of Business (New York: Picador, 2010).
  35. Henry Blodget, “Walmart Employs 1% of America. Should It Be Forced to Pay Its Employees More?” Business Insider,September 20, 2010. http://www.businessinsider.com/walmart-e….
  36. “Wages Fact Sheet.” Making Change at Walmart. http://makingchangeatwalmart.org/factshe….
  37. Arindrajit Dube and Stever Wertheim, “Wal-mart and Job Quality: What Do We Know and Should We Care?” Center for American Progress, 2005. http://laborcenter.berkeley.edu/pdf/2005….
  38. Bethany Moreton, To Serve God and Walmart: The Making of Christian Free Enterprise (Cambridge, MA: Harvard University Press, 2009), 265.
  39. Americans for Tax Fairness, “Walmart on Tax Day: How Taxpayers Subsidize America’s Biggest Employer and Richest Family.” April 2014. http://www.americansfortaxfairness.org/f….
  40. Making Change at Walmart, “An Analysis of Walmart and Walton Family Political Spending, 2000-2012.” June 2013.http://makingchange.forrespect.org/files….
  41. Braverman, Labor and Monopoly Capital: The Degradation of Work in the Twentieth Century (New York: Monthly Review Press, 1998), 195.
  42. Kim Moody, US Labor in Trouble and Transition: The Failure of Reform from Above, the Promise of Revival from Below(New York: Verso, 2007), 37.
  43. Tim Catts, Peter Robison and Ilan Kolet, “Wages Stagnate as US Manufacturers Reap Record Profits.” Bloomberg.com, November 21, 2013. http://www.bloomberg.com/news/2013-11-21….
  44. Tami Luhby, “Low-paying Jobs Are Here to Stay.” CNN Money, August 2, 2012.
  45. See August Meier and Elliott Rudwick, Black Detroit and the Rise of the UAW; Gregg Shotwell, Autoworkers Under the Gun, Haymarket Books; Dollinger and Dollinger, Not Automatic: Women and the Left in the Forging of the UAW.
  46. John Schmitt, “Low Wage Lessons.” Center for Economic and Policy Research, January 2012.
  47. NELP, Analysis of Consumer Price Index, http://www.raisetheminimumwage.com/facts….
  48. John Schmitt, “The Minimum Wage is Too Damn Low.” Center for Economic and Policy Research, March 2012.http://www.cepr.net/documents/publicatio….
  49. NELP, “The Inequality of Declining Wages During the Recovery,” July, 2013 at http://www.nelp.org/page/-/Job_Creation/….
  50. John Schmitt, “Low Wage Lessons.” Center for Economic and Policy Research, January 2012.
  51. Mark Stewart, “The Interrelated Dynamics of Unemployment and Low Wage Employment.” Journal of Applied Econometrics, 22 (2007): 511–531.
  52. Ibid.
  53. Josh Boak, “Low-wage Jobs Unexpectedly a Way of Life for Many.” AP, March 12, 2014.
  54. NELP, “Going Nowhere Fast: Limited Occupational Mobility in the Fast Food Industry.” July 2013.
  55. Josh Boak, “Low Wage Jobs Unexpectedly a Way of Life for Many.” AP, March 12, 2014.
  56. Henry Siu and Nir Jaimovich, “Jobless Recoveries and the Disappearance of Routine Occupations.” Vox, November 6, 2012.
  57. Ibid.
  58. Tami Luhby, “Low-paying Jobs are Here to Stay.” CNN Money, August 2, 2012. http://money.cnn.com/2012/08/02/news/eco….
  59. Gordon Lafer, “The Legislative Attack on American Wages and Labor Standards.” Economic Policy Institute, October 31, 2013.
  60. Gordon Lafer, “One by One, States are Pushing Bans on Sick Leave Legislation.” Economic Policy Institute, November 6, 2013. http://www.epi.org/publication/states-pu….
  61. John Schmitt, “Low Wage Lessons.” Center for Economic and Policy Research, January 2012.
  62. Linda Lutton, “Small Is Big at New Nanotechnology Lab in Wheeling.” WBEZ Chicago, October 25, 2013.
  63. Justin Akers Chacón, “Migrant Workers: Casualties of Neoliberalism.” International Socialist Review, 54, July–August 2007. http://isreview.org/issues/54/casualties….
  64. Doug Hall, “Low-wage Workers Have Experienced Wage Erosion in Nearly Every State.” Economic Policy Institute, February 18, 2014; Elise Gould, Lawrence Mishel, and Heidi Shierholz, “Already More than a Lost Decade: Income and Poverty Trends Continue to Paint a Bleak Picture,” September 18, 2013. The disparity between the decline in the wages of low wage workers and the loss in wealth of all households is likely due to other forms of wealth—including home ownership, stock holdings, etc—which low-wage workers are less likely to have, and which were not accounted for in calculating wage erosion.

The article above is reprinted from #95 of the US-based International Socialist Review, Winter 2014-15.  The website for ISR is here.

Further reading: Low wages, longer hours and less social mobility: welcome to 21st century NZ capitalism

 

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